Pre-tax 401(k) contributions are taken directly out of your paycheck before federal or state taxes are applied. Making pre-tax 401(k) contributions reduces your taxable income for that year. When you disburse your pre-tax 401(k) funds you'll be taxed on the money you originally contributed, plus any earnings that have accumulated over time, as ordinary income. Learn more about what 401(k) contribution types may be best for you.
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